The UK's fourth-biggest grocer showed that it is defying the recession, with soaring sales, surging profits and a juicy dividend.

Traditionally a company with a heavy Northern bias, Morrisons reckons it can attract Londoners with its fresh food offering.

It aims to open 40 new stores this year to add to the 375 it already has, with more to follow the year after, many of them within the M25.

'This is an expression of confidence in what we do,' said finance director Richard Pennycook.

In the year to February sales rose 12% to £14.5bn, profit was £43m higher at £655m and the dividend is up 21% to 5.8p.

The group has ditched a £1bn share buyback scheme to focus on its aggressive expansion plans.

'I hope shareholders will be pleased that we have found good ways to invest the money,' said Pennycook.

The numbers today represent a notable turnaround for a business that had lost its way.

In 2005, a profits warning upset the City, calling into question the leadership of founder Sir Ken Morrison and leading to the finance chief being ousted.

Under new chief executive Marc Bolland, the company has been reborn. Its market share is up from 12.1% to 12.3% - it claims to be taking customers away from all rivals, benefiting from the 'trading down' effect as those looking to save money abandon the premium end of the market.

Unlike the other supermarkets, all of which are looking to grow their non-food businesses, Morrisons only does food.

The chain says that it employs more specialist butchers, fishmongers and bakers than the competition.

Morrisons' 124,000 staff will share a bonus pot of £34m this year - an average of £274 each. Morrisons has calculated that there are more than eight million households who are further than 15 minutes' drive away from one of its stores, which ought to give ample scope for expansion.

All of the big supermarkets have done well during the credit crunch as consumers stock up on more food and drink to enjoy at home. Tesco and the rest of the supermarket chains are unlikely to allow Morrisons to have its own way and will respond with price-cuts in regions where they feel under pressure.

Critics of the industry maintain that claims of a price-war in the sector are exaggerated, however.